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Vonovia SE: Vonovia Makes a Successful Start to the 2019 Fiscal Year With Solid Overall Development (news with additional features)

DGAP-News: Vonovia SE / Key word(s): Quarter Results

07.05.2019 / 07:01
The issuer is solely responsible for the content of this announcement.

Results as of March 31, 2019
Vonovia Makes a Successful Start to the 2019 Fiscal Year With Solid Overall Development

- Vonovia is socially responsible.

- Portfolio investments expanded: Maintenance and modernization increased significantly compared to the first quarter of 2018
(Q1 2018: EUR 221.1 million; Q1 2019: EUR 339.7 million).

- Significant increase in investments in new construction to EUR 54.1 million compared to the prior-year quarter (Q1 2018: EUR 7.2 million).

- Analysis shows that ancillary expenses at Vonovia in Germany have been at a consistently good level for years; Vonovia is below the nationwide operating cost survey.

- Average rent for Vonovia properties is EUR 6.56 per square meter in Germany.

Bochum, Germany, May 7, 2019 - Vonovia SE ("Vonovia") is making a successful start to 2019. All relevant key figures were improved in the first three months. Vonovia plays a central role in society, which is currently discussing the housing shortage, demographic development, migration and climate protection.

"In big cities, the lack of housing has become increasingly noticeable in recent years. Vonovia takes its responsibility seriously. Our positive economic development allows us to invest heavily in new construction and climate protection, better quality of life, senior-friendly homes and good neighborhoods," says Rolf Buch, Chairman of the Management Board.

In the first three months of 2019, Vonovia increased its Group FFO (operating result after interest and taxes) to EUR 303.6 million (Q1 2018: EUR 253.0 million). This development is due largely to the acquisition of Victoria Park in Sweden and BUWOG in Austria.
Good Price/Performance Ratio

As of March 31, the housing portfolio was almost fully rented out, with vacancy at 2.9 % (Q1 2018: 2.8 %). Rental income rose year-on-year to EUR 502.2 million, mainly due to the acquisitions of BUWOG and Victoria Park (Q1 2018: EUR 418.3 million). The development of rents due to market conditions came to 1.2 %. Investments in buildings for more climate protection and better quality of life (2.6 %) and in new construction and vertical expansion (0.2 %) also contributed. "At EUR 6.56 per square meter, we offer a good price/performance ratio," says Rolf Buch.

Surpluses in Rental Income in Germany Are Completely Reinvested in the German Portfolio

The repeatedly expressed statement that 39 cents out of every euro in rental income flows to shareholders is inaccurate and fails to consider that Vonovia operates in several business areas in Germany besides the rental business. The following apply to the rental business in Germany: Rental income consists of EUR 1.68 billion, plus earnings from housing-related services of around EUR 120 million. Of the total amount, which comes to EUR 1.8 billion, around EUR 230 million is expended on HR and material costs. An additional amount of around EUR 370 million is expended on maintenance, which means Vonovia bears these costs in full. An additional sum of around EUR 260 million is spent on interest and taxes. Around EUR 840 million flows as investments back into the buildings - EUR 90 million flows into new construction and so is invested in providing more homes. Thus, all surpluses from rental income in Germany are reinvested in the portfolio in Germany.

Vonovia also has additional income from sales and development and from Austria and Sweden of around EUR 1.56 billion. There is a surplus of around EUR 1 billion after deducting the relevant costs, interest and taxes, which come to around EUR 550 million. In 2018, Vonovia paid out a cash dividend of EUR 380 million; the rest remained in the company.

The dividend yield amounts to about 3.5 % on average.

EUR 800 Billion Required by Housing Market

"I have great sympathy for the worries that people have about no longer being able to move to the neighborhood they want to live in, and for the emotions that are currently being experienced," says Rolf Buch. "As a company, we will continue to contribute in the future to solving this problem. It's clear that without the construction of new apartments, further regulatory measures aimed at the housing market will have no effect."

"With a market share of less than 2 % of the German housing market, we cannot solve the tense situation of people looking for housing by ourselves," says Rolf Buch. "We need constructive social dialogue and a joint effort. Extraordinary investments are required in new construction, more senior-friendly housing and - very importantly - more climate protection; according to estimates, up to EUR 800 billion will need to be invested nationwide by 2030. The private residential real estate companies are particularly in demand because of their investment power. We definitely need the capital of investors and the performance of large companies - independent of their ownership structures."

Vonovia Invests Significantly More in 2019 Than in the Previous Year

In the first three months of 2019, the company successfully expanded its activities, particularly in the area of new construction and investments in its portfolio. The total volume rose from EUR 221.1 million in the first three months of 2018 to EUR 339.7 million in the first quarter of 2019. This was driven by an increase in the modernization volume and new construction by 75.8 % from EUR 137.7 million to EUR 242.1 million. In the long term, Vonovia could build 36,000 new apartments. Over the same period, maintenance expenditure rose to EUR 3.89 per square meter (Q1 2018: EUR 3.86).

Around 70 % of Vonovia SE's German portfolio dates from 1945 to 1980. Another 15 % are even older. Energy-efficiency measures and improvements in living standards will therefore continue to be an important task in bringing the existing portfolio up to date.

Vonovia expanded its business with craftsmen, TV and metering services as well as insurance and value-add services. Beginning in 2018, the company has offered new tenants the option of being supplied with green electricity and natural gas.

Sustainability Report Published

Investments in neighborhood development, climate protection and senior-friendly homes are also the focus of the current Sustainability Report. Modernization measures and new heating systems saved an additional amount of around 27,300 t CO2 in 2018. The supply of neighborhoods with energy also plays an increasingly important role. There are 211 photovoltaic systems in the portfolio; an additional 450 apartments are supplied by biomass district heating systems.

The Group's training rate recently came to 4.9 %. This rate means that Vonovia remains among the top training companies among the DAX 30 companies. Of the trainees, 6.5 % have refugee backgrounds. Integration is important not only to us as an employer, but also as a rental company: During the past two years, the company rented about 10 % of its available apartments to people from Syria, Afghanistan and Iraq.

Ancillary Expenses at Vonovia Under the National Operating Cost Survey

Vonovia has evaluated more than 700,000 operating and heating cost bills for each of 2016 and 2017. The result: In terms of ancillary expenses, Vonovia's tenants pay less than the amount in the nationwide operating cost survey as conducted by the German Tenants' Association (Deutscher Mieterbund), which comes to EUR 2.79/m² per month. Since 2015, ancillary expenses at Vonovia in Germany have been at an almost constant level.

In 2016, Vonovia calculated an average of EUR 2.61/m² per month in ancillary expenses, while in 2017 it was EUR 2.55 EUR/m² per month. The comparison is based on the 14 ancillary expense items that are listed in the ancillary expenses survey. An analysis of individual ancillary expense items also shows that their development is subject to numerous factors that cannot be influenced by a landlord. More than 40 % of ancillary expenses depend on consumption, particularly of heat and water.

In addition, there are large regional differences in government levies, including street cleaning and waste disposal.

Positive Outlook for 2019

The positive development is expected to continue in the 2019 fiscal year. In light of the dynamic development in the German, Austrian and Swedish housing market, Vonovia expects a further increase in the value of its residential property. Vonovia is also raising its forecast for profitability; Group FFO is expected to reach approximately EUR 1.17 billion to EUR 1.22 billion, mainly due to further improvements in efficiency and activities in Sweden. This represents an increase of around 5 % against the previous year. At the same time, Vonovia plans to further increase investments in 2019 as a whole to between approximately EUR 1.3 billion and EUR 1.6 billion.

As published previously, Klaus Freiberg, the Chief Operating Officer, decided to leave the Management Board of Vonovia as of the end of the Annual General Meeting on May 16, 2019. Arnd Fittkau, currently a chief representative, will be appointed to the Management Board at the same time. Konstantina Kanellopoulos will be named as the chief representative of the value-add business, in which Vonovia's services are bundled.

Interim Statement for the First Quarter of 2019:

Media center:

Further information can be found in the Press Section.

2019 Financial Calendar:

May 16, 2019 Annual General Meeting
August 2, 2019 Interim Financial Report for 2019
November 5, 2019 Interim Statement for the first nine months of 2019
March 5, 2020 Annual Press Conference 2019


Financial Key Figures in EUR million   Q1 2018   Q1 2019
Rental income   418.3   502.2
Adjusted EBITDA Rental   303.0   357.4
Adjusted EBITDA Value-add   17.8   35.8
Adjusted EBITDA Recurring Sales   11.5   26.3
Adjusted EBITDA Development   0.3   10.4
Adjusted EBITDA total   332.6   429.9
EBITDA IFRS   299.4   388.2
Group FFO   253.0   303.6
Profit for the period   129.2   201.4
Maintenance and modernization   221.1   339.7
thereof maintenance expenses and capitalized maintenance   83.4   97.6
thereof modernization (incl. new construction)   137.7   242.1
Key Balance Sheet Figures in EUR million   Mar. 31, 2018   Mar. 31, 2019
Fair Value of the Real Estate Portfolio   38,485.6   44,543.0
Adjusted NAV   18,467.5   23,613.1
Adjusted NAV per share in EUR*   38.07   45.58
LTV in %   45.5   42.4
Non-financial Key Figures   Q1 2018   Q1 2019
Number of own apartments   393,639   394,609
Number of apartments owned by third-parties   58,497   78,784
Vacancy rate in %   2.8   2.9
Monthly in-place rent in EUR/m²   6.18   6.56
Employees, number (as of March 31/ December 31)   9,544   9,925
EPRA Key Figures in EUR million   Mar. 31, 2018   Mar. 31, 2019
EPRA NAV   21,916.2   26,452.7
EPRA NAV per share in EUR*   45.18   51.06

* Based on the shares carrying dividend rights on the reporting date in question: Mar. 31, 2018: 485,100,826, Mar. 31, 2019, and Dec. 31, 2018: 518,077,934.
About Vonovia

Vonovia SE is Europe's leading private residential real estate company. Vonovia currently owns around 395,000 residential units in all attractive cities and regions in Germany, Austria and Sweden. It also manages around 79,000 apartments. Its portfolio is worth approximately EUR 44.5 billion. As a modern service company, Vonovia focuses on customer orientation and tenant satisfaction. Offering tenants affordable, attractive and livable homes is a prerequisite for the company's successful development. Accordingly, Vonovia makes long-term investments in the maintenance, modernization and senior-friendly conversion of its properties. The company is also creating more and more new apartments by realizing infill developments and adding to existing buildings.

The company, which is based in Bochum, has been listed on the stock exchange since 2013 and on the DAX 30 since September 2015. Vonovia SE is also listed on the international indices STOXX Europe 600, MSCI Germany, GPR 250 and EPRA/NAREIT Europe. Vonovia has a workforce of approximately 10,000 employees.

Additional Information:
Approval: Regulated Market/Prime Standard, Frankfurt Stock Exchange
Common code: 094567408
Registered headquarters of Vonovia SE: Bochum, Germany, Bochum Local Court, HRB 16879
Business address of Vonovia SE: Universitätsstrasse 133, 44803 Bochum, Germany

This press release has been issued by Vonovia SE and/or its subsidiaries solely for information purposes. This press release may contain statements, assumptions, opinions and predictions about the anticipated future development of Vonovia ("forward-looking statements") that reproduce various assumptions regarding, e.g., results derived from Vonovia's current business or from publicly available sources that have not been subject to an independent audit or in-depth evaluation by Vonovia and that may turn out to be incorrect at a later stage. All forward-looking statements express current expectations based on the current business plan and various other assumptions and therefore come with risks and uncertainties that are not insignificant. All forward-looking statements should not therefore be taken as a guarantee for future performance or results and, furthermore, do not necessarily constitute exact indicators that the forecast results will be achieved. All forward-looking statements relate solely to the day on which this press release was issued to its recipients. It is the responsibility of the recipients of this press release to conduct a more detailed analysis of the validity of forward-looking statements and the underlying assumptions. Vonovia accepts no responsibility for any direct or indirect damages or losses or subsequent damages or losses, as well as penalties that the recipients may incur by using the press release, its contents and, in particular, all forward-looking statements or in any other way, as far as this is legally permissible. Vonovia does not provide any guarantees or assurances (either explicitly or implicitly) in respect of the information contained in this press release. Vonovia is not obliged to update or correct the information, forward-looking statements or conclusions drawn in this press release or to include subsequent events or circumstances or to report inaccuracies that become known after the date of this press release.

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Document title: Vonovia Makes a Successful Start to the 2019 Fiscal Year With Solid Overall Development

07.05.2019 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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